5 Common Mistakes to avoid if you are a First Time Buyer

Getting a mortgage when you’re a first time buyer is tough. Changes to the lending criteria following the economic crash in 2008 has made it hard for first time buyers to secure a mortgage, and has called upon them for very large deposits too.

Figures from Halifax suggest that the average deposit has now risen to around £33,000, 13 per cent higher than the average last year. The number of first time buyers has decreased slightly too, despite schemes like the governments ‘Help to Buy’ which specifically targets this group of buyers.

If you’re looking to get your foot on the first rung of the property ladder, you should make sure you’re well prepared for what’s to come. Here are some of the most common mistakes made by first time buyers, and what you can do to avoid them.

1. You didn’t check your credit report

Having a good credit score will open the door to many more mortgage offers and deals. Find yours out by getting a copy of your report, and ensuring everything on these is factually correct. More on credit scores here.

1. You’ve made an offer without an agreement in principle

You may well have found your dream home, but without an agreement in principle from your mortgage provider, there’s no point in making an offer. Get your mortgage sorted first, and ask your lender for an ‘agreement in principle’ which will give you the confidence and the backing to really leverage your offer.

1. You bought a flat with a short lease

If you’re buying a leasehold flat, you could be in trouble if the lease is shorter than 80 years. You may struggle to get a mortgage and, if you do get one, you may struggle to sell the property later on. Try and get the lease extended before purchase, and if you can’t or the seller won’t do this, negotiate your offer in lieu of the short lease.

1. You didn’t realise how expensive this would be

There are all sorts of costs, fees and charges associated with buying a house, so don’t assume that all you need to worry about is the deposit. From stamp duty to legal fees, it all adds up. Take some time to figure out all the associated costs of moving to get a clearer idea on what you need to pay.

1. You chose the wrong mortgage

With so many mortgages to choose from, it can be difficult to know if you’re getting the best deal or not. Often the variable rates seem cheaper on the surface than a fixed rate offer, but remember you’ll end up making much higher payments when interest rates rise again. Make sure you’ve compared all the offers available to you, and that you understand how different types of mortgages work. In short do your research and if you are unsure then take advice.

Getting a mortgage as a first-time buyer shouldn’t be a complete nightmare. With some forward planning and awareness of the pitfalls, you should be able to get a good deal.

However if you need some help speak to a mortgage broker or financial advisor. We can help you get in better financial shape to get the best deals, and also have access to mortgage products that are not easy to find on the high street or online.

Give me a call if you would like to chat about your options.

10 Questions to ask your Mortgage Adviser

Whether you’re buying your first property or your fifth, it’s a good idea to chat with a mortgage advisor about your situation and the best type of mortgage products for you.

Of course, you can search for a mortgage deal yourself, perhaps by visiting your own bank and or searching online. However this method may not get you the best mortgage deals as your bank will only recommend their own products, and online comparison sites don’t include every deal available.

An independent mortgage broker or mortgage advisor has access to both the high street banks and building societies, and less well-known mortgage lenders. They also have specialist expertise in this area and therefore can often save you money by getting the best deal for your individual circumstances.

If you’re thinking about engaging a mortgage broker to look after that aspect of your property purchase, here are 10 questions to ask them.

Mortgage Broker / Advisor FAQ

1.How do you charge for your services?

Mortgage brokers and advisors typically charge a fee, work on commission or a combination of both. Some mortgage advisors will charge a fee for arranging your first mortgage and then will arrange subsequent mortgages for free. Any money you do have to pay will be nominal when you consider how much you’ll save long term.

2. Are you able to cover the whole mortgage market?

Some mortgage advisors will, others only work with a select number of lenders. To get a good deal, you’re best choosing a mortgage advisor who covers all the major lenders as well as the smaller ones. If you’re still tempted to go it alone it’s worth noting that some lenders, such as The Mortgage Works, will only work with mortgage advisors and you won’t be able to get a deal direct.

3. Are you authorised by the FCA?

You want your chosen mortgage advisor to be suitably qualified and authorised by the Financial Conduct Authority. This is your protection from poor advice or mis-selling. To see if they are, you can search the financial services register >

4. What are the different types of mortgages available to me?

If you’ve never had a mortgage before, or have opted for the same type of mortgage time and time again, you may want your mortgage advisor to explain what the pros and cons of fixed rate, standard variable rate, tracker and the other types of mortgages are. They can advise which might be best for your particular circumstances but you’ll have to make the final decision.

5. Can you give advice about other things?

Mortgage brokers are financial advisors, so they are qualified to advise on related financial matters. Insurance is a key area that’s closely related to mortgages so if you need advice on life insurance, mortgage life insurance (find out the difference between these here), income protection and other insurance products, it’s worth speaking to your mortgage broker about these too.

6. How much of a deposit will I need?

The bigger your deposit, the better the deals your mortgage advisor will be able to find you. You need to know roughly how much you can put down as a deposit before your first meeting together. There’s little point telling your mortgage advisor that you can put down 40% of the purchase price only to backtrack later and admit you can only put down 20%.

7. How much can I/we borrow?

Your mortgage advisor will ask you a lot of questions and run through affordability checks before they tell you how much you could potentially borrow. It’s important that your credit score is good and it’s always advisable that you hold off from applying for any form of credit in the months leading up to your first meeting/applying for a mortgage.

If you aren’t able to borrow as much as you would like, you could choose to go away and save a bigger deposit or adjust your property search criteria accordingly. Remember, you can’t use a credit card or loan to cover your deposit, lenders simple won’t allow this, so savings and windfalls are the only way.

8. How much is the mortgage arrangement fee?

Lenders charge mortgage arrangement fees which can be up to £2000 but on average are £1000. You can choose to pay it straight away or add it onto your mortgage, the choice is yours. If you can afford to pay it straight away, you won’t end up paying interest on it. There are other costs too, such as mortgage valuation fees, surveys, and sometimes mortgage account fees and booking fees.

9. How much will I have to pay each month?

Depending on the type of mortgage you choose you might know exactly how much is going to come out each month (with a fixed mortgage) or it might vary depending on the interest rate and other factors. If you’re on a fixed deal for a set number of years, you need to be aware that the amount you pay is likely to go up once the deal ends, which is why many people decide to remortgage and find another deal when this happens.

10. How long should it take to arrange my mortgage?

This can vary considerably as it depends on how quickly you can get the documents needed, how quickly your mortgage broker does what’s required of them (super fast in my case!), and how long it takes your lender to approve you and the property you intend to buy.

If you’re wanting to put an offer on a house, your mortgage broker can give you a document stating that you’ve got an offer in principle from a lender, which shows estate agents that you’re a serious buyer.

Ready to take the next step and start looking for a mortgage? Contact me so you can quiz me on the above questions! Call 01252 759233 or email info@thesurreymortgagebroker.co.uk

10 Affordable Places to Buy in Surrey

Surrey is not a county well known for affordable living. In fact, according to research by Zoopla, Surrey’s property prices are some of the most expensive in the country. Five out of ten towns in their Property Rich List – highest value towns – are in Surrey, including Virginia Water, Cobham, Esher, Richmond and Weybridge.

The average property price in these Surrey towns ranged from £916,469 to £1,385,218, hardly affordable by anyone’s reckoning. Surrey overall has an average property price (APP) of £507,957 compared to the national average of £232,885.

So is it possible to buy a house in Surrey for a more modest amount of money? Here are 10 property hotspots that will get you more for your money, even in an expensive county like Surrey.

1. Stanwell – £303,921 APP

If you like to travel Stanwell could be the ideal location, just half a mile from Heathrow Airport. While Stanwell maybe one of the more economically deprived areas of Surrey, that doesn’t mean that property prices are gloomy, 2016 property prices were up 13% on the previous year, and up 26% on 2014.

2. Goldsworth Park – £313,450 APP

Goldsworth Park is an area close to Woking with a good choice of different residential properties and local amenities. It has easy transport links to Woking and on to London by train, and also plenty of green spaces. Sold prices were up 8% last year.

3. Whyteleafe – £326,846 APP

Whyteleafe is just inside the M25 south of Croydon and 30 mins for Central London by train. Situated on the North Downs, Whyteleafe offers a combination of village life, countryside, and the benefits of being close to more urban towns and the city. House prices (sold) were up 10% last year on 2015.

4. Tongham – £345,934 APP

Close to wealthy neighbour, Farnham, and also conveniently placed for Guildford, Tongham is an affordable place to live in this part of West Surrey. Predominately housing with local amenities in the surrounding towns, it is close to great countryside and home to the fantastic Hog’s Back Brewery. House prices are on the up in this area, 19% on 2015.

5. Redhill – £352,817 APP

Just outside the M25 on the North Downs, Redhill has a busy town centre with station and easy access to London. Also close to the M23 to get to Gatwick Airport, or carry on to the A23 until you hit the coast at Brighton. House prices are climbing, up 12% on 2015.

6. Blackwater £356,558 APP

Blackwater is an area situated north of the M3 close to Camberley and Frimley. Away from the hustle and bustle of Camberley proper, with easy access to great countryside it’s a good option for anyone looking to be in the ‘M3 corridor’. Although there is a station, trains don’t go to London, however you can get a train to Reading and then London Paddington from there. Property prices were up 10% last year.

7. Byfleet – £362,613 APP

Byfleet, not to be confused with West Byfleet (APP £596,109) is on the other side of the M25 from it’s more affluent neighbour but close enough to visit! Byfleet is small with a village feel, close to New Haw station with trains to Waterloo (approx. 45mins). While not as popular or expensive as it’s neighbours (Weybridge is also close by), house prices are still climbing, 6% on 2015.

8. Horley – £365,901 APP

Horley is not far from Redhill and benefits from being close to the M25, Gatwick Airport and trains to London. A typical Surrey commuter town. Some online commenters feel it’s a little too industrial and soulless for them, but if you’re looking to get out of London at the right price it could be for you. Property values have not increase much in the past year, although they are up 15% on 2014.

9. Addlestone – £378,594 APP

Another Surrey town close to the M25, Addlestone has a busy town centre with plenty of amenities. Good access to London, airports and further west, and the Surrey Hills, Wisley RHS Gardens, and the Basingstoke Canal are all on your doorstep. Property values have increased by 9% since 2015.

10. Farncombe – £378,865

15 minutes walk from more expensive Godalming and with in easy reach of Guildford, Farncombe has mixture of housing, some more desirable than others. Fantastic location for anyone who wants to be close to the countryside and further away from London – however commuting is still a viable option with trains to London taking approximately 45 minutes. House prices were up 7% last year on 2015.

While property doesn’t come cheap in Surrey, compared to the national average, if you want to live west of the capital these are the places to explore.

If you need mortgage advice for securing your Surrey home, give me a call for a chat about your circumstances. 01252 759 233 or email info@thesurreymortgagebroker.co.uk

How to Calculate whether you can get a Mortgage for a Second Home

It’s not just first time buyers who are struggling to get accepted onto good mortgage deals these days. Second home owners are having a tough time too, with stricter lending criteria than we’ve seen in the past, and increases in stamp duty, making it harder to afford a second home.

Despite being asked to jump through hoops, the number of second home owners is on the rise. Record low interest rates and rapidly increasing house prices is motivating many homeowners to look into investing in a second property, either as a holiday home for themselves or as a buy-to-let* property.

But getting a second mortgage takes some planning, and could put your main home at risk if you’ve secured your borrowing on it. Here’s what you need to know.

The usual suspects

When you’re applying for a second mortgage, all the usual checks and confounding factors are sure to come into play, only this time they’ve got more clout. Needed a 10 per cent deposit for your main house? You could be asked for 25 per cent for your second. Needed a good credit score for your first house? You’ll need to be outstanding for this one.

If you’ve been through the mortgage process before, you should already know what you’re facing. As far as borrowing goes, you’re instantly a bigger risk to the lenders because you already have one mortgage, so expect them to be twice as tough on everything this time round. If you’ve paid off your mortgage, happy days; getting a second should be much easier.

Affordability Factors

Your mortgage provider will look at three main issues when deciding if you can afford a second mortgage or not. These are:

• Your income: Your lender should ask to see copies of your bank statements, as well as proof of any savings on investments you are benefitting from. State benefits, pensions and any other sources of income should be disclosed and proven here too.

• Outgoings: This is all about affordability, so even if you are desperately keen to secure a second home, you should aim to disclose absolutely all your outgoings at this stage. Think about regular outgoings like utilities and council tax, and those less regular ones such as Christmas and birthdays too.

• Coping with changes: Right now, homeowners on variable mortgages are enjoying record low interest rates, but it’s not going to stay that way forever. You and your mortgage lender will want to ‘stress test’ your mortgage deal to see how you would cope if, for instance, interest rates rise again or if you, or your partner, loses your job.

Honesty is the very best policy at this stage, so try to bring to light everything you know about your own financial situation. If you try to make it look like you’ve got more disposable cash than you really have, you’re only risking falling into financial trouble later on.

Other expenses

Aside of the usual checks, raising a huge deposit and making sure you definitely can afford this second home, you need to be aware of some of the other expenses which are tied in with a second home, and which are generally more substantial than they would have been with your first.

• Stamp duty: Stamp duty on second homes is much higher than that on your main residence. Currently properties costing £125,000 or less are free of stamp duty, but on a second home they will cost 3 per cent. In general, you will pay around 3 per cent more stamp duty for each bracket of house values than someone who is buying a main home.

• Council tax: Council tax is a bit of a grey area, with councils free to offer discounts or indeed to charge a premium as they wish. It’s worth checking out the situation where you’re planning to buy, as some councils can charge double for second homes in their area.

• Fees and charges: Solicitors fees, survey fees, estate agent charges… chances are you had to pay all these things back when you bought your main home, but bear in mind that the costs for a lot of these services has increased substantially since you were last in the housing market. Get quotes and make sure you’re fully aware of all the costs involved.

Being able to afford a second home is a great position to be in, and not a bad way to invest your extra cash. With interest rates at an all-time low and house prices rising steadily, your money will work harder for you in property than it will in a savings account.

If you would like to discuss your plans for buying a second home, and investigate potential mortgage deals, please get in touch. Call 01252 759233 or email info@thesurreymortgagebroker.co.uk.

* If you’re thinking about investing in property to then rent out, you’ll need a specific buy-to-let mortgage product. More about these here.

5 Questions to ask when Remortgaging

Remortgaging can fulfil a variety of needs. From releasing equity to pay for the things we love, to reducing the time it takes to pay our debt in full, many of us will consider a remortgage at some point in our home owning lives.

Ultra-low interest rates have driven a surge in remortgage applications, with 120 per cent more applications last winter than there were in 2014. The reports of massive savings and reduced mortgage terms is enough to send us all running to the lenders for quotes, but it’s important to think things through when it comes to a mortgage.

A mortgage is unlike any other form of lending; it’s the one biggest purchase most of us make in our lifetime, and is something we’ve got to live with for many years of our lives. Added to this is the ongoing concern that if we get it wrong, we could end up homeless. With all this in mind, it’s clear that a remortgage should be undertaken with the utmost care and consideration.

Here are the questions you should be asking yourself, and your lender, before entering into any kind or remortgage deal:

1. Is this the right time to remortgage?

Depending on your situation, it could be a great time to remortgage, or a really bad one. If you’re in a good value mortgage deal already or have big penalties to pay if you leave, chances are it’s not the right time to switch. However, if you’re at the end of your current deal, are on a fixed rate which is no longer good value, or want to release some of the equity from the house, it could be a good time to consider a remortgage.

1. How much is this going to cost?

Unfortunately, nothing in life comes cheap, and the same goes for your remortgage deal. Aside from any exit fees you might have with your current lender (be sure to check these out thoroughly before going any further), there are several other costs associated with remortgaging. For example, you’ll need to pay an arrangement fee to join a new lender, will need survey and legal fees and there may be other administrative costs to cover depending on how your lender is set up.

1. Will I be able to get a good / better deal?

New mortgage rules came in during 2014 that could mean you’ll struggle to obtain a good value mortgage in the current economic climate. Lenders must closely analyse your income and expenditure, and will undertake much more rigorous tests to ensure you can afford the new mortgage. If your circumstances have changed since you last got a mortgage, don’t presume you’ll get the same or similar deal as you did last time.

1. What am I trying to achieve?

There are numerous reasons people consider a remortgage, so be certain of your financial goals so you can effectively ensure they are being met. For example:

• You want to pay off other debts: If you want to remortgage to release equity and pay off credit deals elsewhere, make sure your mortgage is the right vehicle for doing this. Once you’ve taken into account the fees and charges, a personal loan might be better.

• Your deal is ending or poor value: This is a great reason to remortgage, but you need to be confident you’re getting a better deal from your lender. Do your sums, and don’t sign until you’re confident it’s worth it.

• Your home has appreciated: If your home has gone up in value significantly, you could be in a new loan-to-value band, meaning you could be eligible for much lower rates of interest.

Other reasons include changing from an interest-only to a repayment mortgage, or to reduce the overall term on the agreement now you’re able to pay more. Whatever reason you’re remortgaging for, have your overarching financial goal in mind and assess any offer to ensure it’s ticking your box.

1. Is my credit file healthy?

It almost goes without saying that a good credit record is fairly essential to switching to a new mortgage. The more black marks or outstanding debts on your file, the fewer deals will be open to your application. Get a copy of your report before you start applying, and check everything on there is fair and accurate to avoid nasty surprises later on.

More on credit reports and how to improve your score here.

As a homeowner, it is your right and privilege to seek out a better deal for your mortgage. Many borrowers report saving thousands of pounds over the lifetime of their mortgage as a result of switching away from their original deal, so it could pay dividends to compare the market from time to time.

However, as with any loan, do make sure you can afford the repayments and that the overall deal makes good financial sense before you sign on the dotted line.

For more advice on remortgaging and help finding a great deal, contact me on 01252 759233 or email info@thesurreymortgagebroker.co.uk